Directors have a crucial role in any limited liability company. He manages the business and administrative activities. There are many instances where a director wants to resign and leave the company. There are several different reasons for the resignation or termination.
It may include misconduct, negligence towards duties, legal issues, etc. We will discuss the reasons, details and relevant details in this article. Ask The Law, also provides you with the legal assistance, along with legal counselling. We have top lawyers in Dubai for all over the UAE. Let’s discuss further.
Sometimes it becomes imperative to vacate the director position accurately. Besides, sometimes it is required by the regulatory norms to do so. The article will discuss the reasons for the termination or vacancy of directors working in a limited liability company in the UAE and how lawyers in Dubai can play a supportive role.
It also covers the companies under the mainland including Dubai International Financial Centre (DIFC), and Abu Dhabi Global Market (ADGM). Contact Ask The Law Lawyers for further free zones and relevant areas in UAE, subject to this discussion or subject. Do you know which law governs this principal?
Federal Law: Governs and Manage
Any Limited Liability Company on the mainland of the UAE is governed by federal law. The federal law of 2021 is based on commercial companies. Limited Liability Company is defined as a business or entity that comprises at least 2 partners that can go up to 50 partners.
Any juristic or natural person can become a partner in a limited liability company in the Mainland UAE. Under this, the liability established on every partner is restricted to the extent of its shares. It is clearly outlined in the Memorandum of Association (MOA). Limited Liability Company has proper management. MOA or MOU is drafted by our experts, reviewed by our experts, and also we advise on the MOAs or MOUs. But what is MOA?
- MOA: The directors or the managers are the ones who take care of the business activities. Besides, they are elected by the partners or third parties. For the selection, a Memorandum of Association MOA is used which is determined by the partners.
In case the managers are not determined in the MOA or under an independent agreement, the general assembly of partners will make the appointment. Nevertheless, the managers hold a critical position within the company. They are granted extensive authority and full-fledged powers to handle business affairs. Additionally, all such actions that are undertaken by the managers should be fully abided upon by the entity. The powers can be limited according to the contract or Memorandum of Association MOA by virtue.
The managers have pivotal roles and responsibilities to act upon. Besides, there is a corresponding and absolute liability that is present for them. The responsibility is towards the partners, the company, and the third parties. They are responsible for the action undertaken for the implementation of their scope and nature of work. The managers are liable for any kind of fraudulent activities that are committed within the company.
Liability of Directors or Managers
They are equally liable for any sort of expense or losses borne due to abusive use of power, violation of legal provisions, any gross error or mistake by the manager, or violation of the Memorandum of Association MOA.
- Removal of Manager: A manager can be removed from their position and dismissal may take place in special circumstances.
- UAE Commercial Law: Under the UAE Commercial Companies Law, there are many judgments by the Dubai Courts of Cassation. They assert the possibility of the removal of managers by a majority of 75 percent of the total shareholders in a company. 75 percent of the shareholders present in the full quorum of a general assembly can easily remove a manager from their position.
As per the Companies Law Dubai International Financial Centre DIFC Law, the manager or director can be removed. The law of 2018 requires each of the private companies to incorporate in the Dubai International Financial Centre DIFC.
It is compulsory to have at least 1 director. However, all the public limited companies incorporated in the Dubai International Financial Centre DIFC zone should have at least 2 directors. The law clearly elaborates on the eligibility of and appointment of a director following the guidelines.
Rules of removals in DIFC:
The first director of a company in Dubai International Financial Centre DIFC should be selected by the incorporators. Following this, the rest of the directors should be elected by the ordinary resolutions. The guidelines are mentioned in the Articles of Association (AOA).
Ending Notes:
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